A bipartisan movement of US lawmakers are considering forming new legislation to regulate cryptocurrencies, prompted by the increasing interest – and therefore risk – in cryptocurrency worldwide, according to Reuters.
There is currently no singular body in charge of overseeing cryptocurrencies in the US– the responsibility is instead divided between individual states, the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Treasury Department, and the Federal Reserve.
The SEC and the CFTC did hold a joint hearing on Feb. 6 on their roles in cryptocurrencies, Blockchain technologies, and Initial Coin Offerings (ICO). The general conclusion was that the two bodies would work together to create a regulatory framework, with the strictest regulations for ICOs and the most loose for Blockchain and digital ledger technology.
The hearing also concluded that cryptocurrencies will need protective regulation against market manipulation and fraud.
Republican Senator Mike Rounds, a Senate Banking Committee member, was prompted to insert himself into the crypto regulation debate due to the growing popularity of cryptocurrencies:
“Six months ago, we didn’t see this explosion. The marketplace has changed.”
Rounds told Reuters, that while there is, “no question about the fact that there is a need for a regulatory framework,” he sees a chance for crypto to be regulated as both a commodity and a security.
The global debate over whether cryptocurrencies and ICOs should be regulated as securities has already led to some concrete legislation. On Feb. 17, the Swiss Financial Authority released a set of guidelines to help determine if an ICO and its tokens should be regulated under securities legislation. The US has yet to release a similar document.
Two days ago, on Feb. 16, special assistant to the president and White House cybersecurity coordinator Rob Joyce told CNBC that general regulation of cryptocurrencies is something not yet “close,” as they were still in the “studying and understanding” stage of regulation.
However, Reuters reports that US lawmakers are beginning to ask for legislation that would put digital currencies under SEC’s investor protection rules for securities, this new desire prompted by the steady growth of the crypto markets.
Republican Representative Bill Huizenga, chairman of the House Financial Services Subcommittee on Capital Markets – which will soon hold hearings on this topic – told Reuters that the “SEC is properly the lead on the issue.”
Democrat Carolyn Maloney, a senior member of the House Financial Services Committee, agrees with Huizenga’s perspective that the SEC should be the regulatory crypto body, telling Reuters that, “a lot of people don’t realize there’s nothing backing these virtual currencies.”
Even “free-marketer” Republicans like Dave Brat, a member of the House Freedom Caucus, are prepared to back regulatory legislation:
“If it’s a currency that could destabilize the whole economy, you’re going to have that conversation.”
In spite of this beginning of calls for regulation, lawmakers will still protect revolutionary technological innovations like Blockchain, Democratic Senator Chris Van Hollen, a member of the Senate Banking Committee, told Reuters:
“The goal here is to have rules of the road that protect consumers without trying to squash innovation.”